Wells Fargo has agreed to pay $35 million to settle allegations that it overcharged more than 10,900 investment advisory account holders by roughly $26.8 million in fees, the Securities and Exchange Commission announced Friday.
“For years, Wells Fargo and its predecessor firms negotiated reduced advisory fees with thousands of clients, but failed to honor them,” Gurbir S. Grewal, the SEC’s director of enforcement, said in a statement. “Today’s enforcement action underscores the need for firms growing their businesses through acquisition to ensure that their growth does not come at the expense of client protection.”
Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network overcharged some clients who opened accounts before 2014 for advisory fees through the end of December 2022, the SEC noted.
Wells Fargo neither admitted nor denied the SEC’s allegations, but the bank paid affected account holders roughly $40 million, including interest, as a reimbursement, the SEC noted.
“We’re pleased to resolve this matter,” Caroline Szyperski, a Wells Fargo spokesperson, said Friday in an emailed statement to Banking Dive. “The process that caused this issue was corrected nearly a decade ago. And, as noted in the settlement documents, Wells Fargo Advisors conducted a thorough review of accounts and has fully reimbursed affected customers.”
From 2002 to 2014, certain Wells Fargo representatives and advisers from its predecessor firms agreed to lower the advisory fees when the clients opened the accounts. The representatives made handwritten or typed changes to the firm’s standard advisory agreement documents, but occasionally, they failed to enter the reduced fee. As a result, the clients were overcharged for advisory fees, the SEC found.
The SEC settlement is the latest in the long list of penalties Wells Fargo has paid — particularly since the bank’s 2016 fake-accounts scandal. Wells Fargo and the Consumer Financial Protection Bureau reached a record $3.7 billion settlement in December over several consumer abuses related to auto loans, mortgages and deposit accounts.
Wells Fargo, however, this week beat a shareholders’ lawsuit alleging it should pay shareholders over allegations that the bank conducted interviews of nonwhite and female candidates for jobs that had already been filled to satisfy a diversity policy Wells has since adjusted.
Separately, Wells Fargo customers faced technical issues with its banking system Thursday night, as hundreds of complaints poured into Downdetector, a platform that tracks service issues and outages.
Customers encountered issues transferring funds or with ATMs declining cards, the complaints said.
“We are aware that some customers are experiencing intermittent issues with certain transactions,” Szyperski said in an emailed statement. “Our teams are working diligently to resolve. We apologize for any inconvenience.”